Markets traded flat for the week. Nifty ended down marginally in the negative zone. It was flirting with the 9950 levels. The week was range bound with the index doing a balancing act. Where financials dragged Reliance supported. Dixon and Bharat closed their IPOs with decent response. Dixon being the more fancy IPO to be watched. A lot of other players have lined up for moping public funds. FII were relentless sellers. They sold more than 2500cr worth of stocks. DII countered but not with the same quantum. Sentiment seems cautious.
Technically looking at the charts 9880 is a key support from where Nifty comes back up. On the up side 9970-80 is the tough ceiling to crack. Nifty has been in this range and is likely to remain till something substantial should happen. The longer term support stands at 9830 where its 50 day EMA has been defended on 3 occasions. Till Nifty trades above 9800 the medium term trend should point upwards. FnO stats show a lot of writing happening at 9800. On the upside call writing has been seen around 10000 levels. A breakout of either side will give fresh momentum.
Fundamentally – picture does not change. Markets are at lofty valuations. Nifty trades at 25x+ P/E. This is outrageous. Given the liquidity it does make sense. It’s a matter or time when the dry powder will be gone. Most of the stocks and sectors are trading at premium valuations to their average historical numbers. Fundamentally picture does not look good. Lack of trigger and liquidity keeps the market afloat.
Globally things are all over the place. North Korea tension continues. US Fed meets start. Debt ceiling and extending the stimulus are doing the rounds. The sentiment is all over the place. Dow is still below 22k. It’s as if almost every one is in wait and watch mode. And this trend and sentiment has boiled down to all major markets. A positive trigger can lead to the fresh break out of the Dow – although it is overbought.
Sector wise – Metals should take a breather. They look stretched and over bought. Be cautious with long positions. Its a good time to take away some trading profits. Pharma looks shaky. One needs to do proper bottom fishing in the sector. Nifty bank should lead the market. 24500 once breached will give it fresh legs to take the market higher.